AAT L3 Tax Processes Workbook Chp1

VAT paid by a customer on a purchase invoice is treated as which of the following in a supplier's VAT return?

• Income Tax

• Input tax

• Output tax

• Sales tax

'VAT is a direct tax'

• True

• False

A sales invoice for taxable supplies that includes standard rate VAT is being processed by a VAT-registered business. What will be the effect of this invoice on the VAT due to be paid by this business to HMRC?

• It will have no effect on the VAT payable by the business

• It will increase the amount of VAT due to be paid

• It will decrease the amount of VAT due to be paid

A VAT-registered business issues a credit note to one of its customers. The credit note is for £100 plus VAT at 20% and relates to an original invoice of £560 plus VAT at 20%. What will be the effect on the VAT due to be paid by HMRC?

• It will increase the VAT payable by £20

• It will decrease the VAT payable by £20

• It will increase the VAT payable by £112

• It will decrease the amount payable by £112

A retailer buys goods from the manufacturer for £500 plus VAT of £100. It then sells them to a customer for £800 plus VAT of £160. How is the total VAT of £160 paid to HMRC?

• All £160 is paid over to HMRC by the customer

• All £160 is paid over to HMRC by the retailer

• The retailer pays £60 and the manufacturer pays £100 to HMRC

• The manufacturer pays the whole £160 to HMRC

An invoice that includes goods at a reduced rate VAT means that the rate of VAT charged on these goods is which of the following?

• 0%

• 5%

• 17.5%

• 20%

Which of the following would be a reason for a business to choose to voluntarily deregister for VAT?

• It only supplies standard-rated goods

• Whilst it previously supplied standard-rated goods, it now only supplies products that attract reduced rate VAT

• The owner of the business is winding the business down prior to retiring

• The business only supplies zero-rated products

Which of the following businesses can voluntarily register for VAT?

• A business that only supplies products which are exempt from VAT

• An individual who sells their own second-hand clothing on ebay

• A business that annually supplies standard-rated goods with a list price of £47,000 pa

• A business that supplies exempt goods with a list price of £98,000 pa

A business that registers for VAT receives which of the following as a proof that it has registered?

• A VAT return

• Certificate of registration

• Trading certificate

• VAT control account

Fistrall Ltd submits its first VAT return on 30 June 2023. Which of these is the last year that Fistrall Ltd must retain its business records relating to this VAT return?

• 2025

• 2027

• 2029

• 2030